Govt’s May Need to Do for Workers What They Did for Banks

Published on IPS, by Isolda Agazzi, Oct. 19, 2009.

GENEVA, Oct 19 (IPS) – The finding by the World Trade Organisation (WTO) and the International Labour Organisation (ILO) that the dropping of trade tariffs leads to jobs being lost in the formal sector while informal jobs grow is another confirmation of the adverse consequences of forced trade liberalisation.

Mark Halle, executive director of the International Institute for Sustainable Development’s Europe office, based in Geneva, in response to IPS’s questions about the joint study said that “it has long been clear that, if trade openness could benefit developing countries, that benefit depended on certain baseline conditions being in place before the economies are forced to open.

“In reality, most developing countries have had no choice in liberalising and have then been forced to scramble to ensure that they could draw some benefit from the new openness. In doing so, they received precious little help,” admonished Halle … 

… The authors strongly recommend facilitating the adjustment process and the creation of formal jobs through education and vocational training, even if it may require additional resources and the extension of public jobs.

Recommendations also include promoting employment-friendly trade and carefully designed trade reforms that take into account country-specific situations.

Somavia also criticised the formerly vaunted policy of export processing zones (EPZs). “We are closing the circle of 30 years where the policy drivers were finance and trade, as against other issues in the development agenda. We are moving towards policy coherence, but we still have to understand the interactions between these issues.”

He cited the promotion of EPZs as an example of policy incoherence. These zones were supported by the World Bank and the International Monetary Fund in the 1980s and 1990s to attract foreign investment by reducing taxes on companies and closing an eye to how they treated workers.

“You put countries in a tax competition because what one country does not want to give you, the other one next door does. From the viewpoint of policy coherence, you treat export as if it was something separate while the rest of the country continues with its own life.

“There are successful EPZs, but in the long run export and import must be linked to the overall economy of the country,” was his admonition.

Social concerns are the forgotten issue of globalisation. Traditionally, the WTO has been dealing with trade and the ILO with labour, but the two organisations are timidly trying to improve their cooperation.

In 1996, the WTO published a compromise declaration on the ILO core labour standards that stressed that these should not become an additional conditionality and therefore a form of “disguised protectionism”. END/2009. (full text).

Links:

In wake of IMF meeting: Dollar plunge highlights fault lines in global economic “recovery”, By Barry Grey, 10 October 2009.

Nach der IWF Tagung: Der Sturz des Dollars wirft ein Schlaglicht auf die Bruchstellen im “Genesungsprozess” der Weltwirtschaft, von Barry Grey, 20. Oktober 2009.

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